Events And Issues

New Delhi, 5 March 2007

India Moves Towards Progress

 FARM, INFRASTRUCTURE SECTORS WEAK

By Dr. P.K. Vasudeva

Despite bottlenecks in infrastructure and governance, the Indian economy has developed resilience. It is moving forward on a calibrated growth agenda, step by step, milestone by milestone, Commerce and Industry Minister Kamal Nath said recently. There is nothing new. There is everything better, he said at the recent India Economic Summit, jointly organized by the World Economic Forum (WEF) and the Confederation of Indian Industry (CII) in New Delhi. The competitiveness amongst the Indian States attracting investment, the slow but sure change in attitude in the polity, in bureaucracy and Government, are positive indices, he said.

On the WTO impasse, Nath declared that the world of tomorrow would not be a world of tariffs but a world of rules. “We are willing to negotiate commerce but not subsistence,” he said categorically, referring to India’s stand on agriculture-related issues. “Structural flaws cannot be perpetuated,” Nath said. He felt that the basket of protectionism was, in fact, heavier on the western side vis a vis India’s stand. A 35 per cent increase in imports every year cannot be termed as protectionism, he felt.

Expressing amazement at India’s achievements in recent years, Hoang Trung Hai, Minister of Industry of Vietnam observed that India’s success had risen from the talent of her people.  Though Vietnam too has logged 7.5 per cent growth and moved from an agriculture-based to an industry based economy, the high-tech sector there is not as developed as that in India, he said. He felt that India needs to mobilize its agriculture sector to create more wealth for rural people.

The Indian culture thrives on transcending hurdles, stated Peter Bakker, Chief Executive Officer, TNT, Netherlands. He felt that major hurdles to India’s growth lay in the lack of infrastructure and the barriers between states, impacting both logistics and cost. “There is progress but a lot more needs to be done,” he said.

“The direction is right, the question is the speed,” said Hans-Joachim Korber, Chairman and CEO of Metro AG, Germany, calling for opening up of the food sector, both basic agriculture as well as processed foods. Describing India as one of the most important food factories of the world, he spoke about his company’s investment in educating farmers to ensure quality on its shelves. “The Indain economy is driven by domestic demand, the services sector and hi-tech products… India has to work towards raising the standard of living of its middle class,” he said.

“Non-tariff barriers were serious hurdles in India’s growth path,” according to B. Ramalinga Raju, Founder and Chairman, Satyam Computer Services, who felt not granting of visas and immigration issues were akin to not letting ships dock in ports.  At home, while India has, and would continue to have, sufficient human resources per se, the challenge is to make the three million graduates / engineers created every year more employable in the global space, he said.  This presents a great opportunity for private industry, while the Government needs to put an enabling framework in place, Raju said.

Kevan V. Watts, Chairman, Merril Lynch International, the UK, described the Indian financial and capital markets as well as developed, but cautioned that financial services and software alone cannot carry the entire burden of growth. “India needs better integration with the global economy across all sectors,” Watts said. On FDI, he felt that merely eliminating caps without changing attitudes would not help much,” he added.

“Capacity building is critical to ensuring that significant numbers of people are equipped to participated in the market economy,” said R. Seshasayee, Managing Director, Ashok Leyland, and President of the CII. He noted that growth had ensued “whenever we have pushed an activity towards the market economy.  Hurdles have to be made into opportunities…. But, the process has to be necessarily slow to engage more people with the system…. We need to pursue the agenda of globalization with very specific solutions for each sector.”

All the speakers including Kamal Nath have expressed at the World Economic Forum that India can be a global economic power if it improves its infrastructure, encourages FDI, raises standards of living of the rural India and educate farmers on better output of foodgrains by diversification of crops. It also needs to remove trade barriers between the States, improve power and water shortage and continue fighting for the reduction of trade distorting agriculture subsidies existing in the developed countries even after the World Trade Organisation (WTO) implementation since 1995 at various WTO forums.

India cannot afford to neglect its 67 million farmers, especially when the growth of agriculture has now come down to 2.7 per cent and when the import of agriculture products will be imperative for the country. It is a matter of grave concern that India has not been able to take of its food security and rural population in the right earnest. ---INFA

 (Copyright, India News and Feature Alliance)